2 high-quality shares with fast-growing dividends 

Income is important to many investors. But some investors would rather accept a much lower dividend today, for the chance of massive dividends in the future.

With that in mind, here are two companies which have a low yield today, but could end up paying out far more income over the long term, than some of the typical high-yield shares.

Corporate Travel Management Ltd (ASX: CTD)

Having only been listed for seven years, Corporate Travel Management has certainly built an impressive history so far. The company provides travel management solutions to businesses throughout Australia & New Zealand, the USA and Asia. 

And it seems to be doing it better than anyone else. It’s had no trouble winning clients, with revenue increasing ten-fold, from $31 million in 2010, to over $320 million in 2017.

In the last five years, the total shareholder return has been a whopping 47% per annum. Corporate Travel has managed to grow its earnings by 29% per year. And over that time the dividend to shareholders has also grown by 27% per year.

At first glance it doesn’t look cheap, with a forward price-to-earnings (PE) ratio of 30. But with earnings (according to some analysts) forecast to grow by around 30% per annum over the next two years, the price could very well be justified.

The current dividend yield is 1.4%, plus franking credits, making it a grossed-up yield of 2%.

CSL Limited (ASX: CSL)

Quickly growing into one of the largest companies on the Australian share market, CSL needs little introduction.

The superstar biopharmaceutical company lifted profit guidance last month after better-than-expected product sales, and for FY18 it expects to deliver a net profit after tax of around US$1.7b.

Over the last 10 years, CSL has delivered investors a total shareholder return of 20% per annum. And looking back further, over the last 20 years, the dividend has grown at a rate of 13% per annum.

The company is currently trading for around 39 times earnings, based on management’s recent guidance. Earnings are forecast to grow by around 24% per annum over the next 2 years.

Foolish takeaway

Based on current prices and growth forecasts, Corporate Travel Management appears to be better value. Holding high-quality companies like this is a proven way to build substantial wealth and income, over the long term.

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Motley Fool contributor Dave Gow owns shares of Corporate Travel Management Limited. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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